With Europe trying to deal with its debt crisis, the effects have been felt by Australia as over $120 billion had been wiped off its shares in the market in the month of May. This has been the lowest level that Australia’s stocks had fallen in six months.

The market had plunged by 2.6 percent, wiping off about $35 billion from the local shares. With the market’s loss reaching $121 billion with its year’s peak on May 2, Australia could have already bought A380 super jumbo jets.

In an effort to reignite growth in the sagging economy, the Reserve Bank of Australia has made a cut on its interest rates, with the dollar diving on the recent decision.

As evidence of weaker demand in the Australian economy continues with weaker global conditions hitting exports and restricted wage growth keeping prices in check, the RBA has cut its growth and inflation forecasts for the next 18 months, according to its Statement on Monetary Policy released recently.

Small businesses today have more to worry than those in the past decades like fuel costs, cash flow, and interest rates. This is the main reason why small business owners are losing their confidence on the economy. It has been noted that their confidence levels have gone down to very low levels not seen since the global financial crisis.

The MYOB Business monitor report for March showed that only 19 percent, or less than one-fifth, among small business owners and managers have faith that the economy will improve in the next 12 months.

Weak business confidence pulls Australian dollar down by a third of a US cent.

The Australian dollar has seen a slight drop in quiet trade just recently as investors display weak business confidence, sitting on the sidelines awaiting the outcome of a Spanish government bond auction.

After a four-session losing streak where the index fell to a closing level not seen since March 12, the Australian share market showed a growth quite recently, helped by signs of easing pressure on government finances in Spain and Italy and some benign local data.

A rise of 0.4 per cent to 4264.80 in the benchmark S&P/ASX 200 index, scaling down week-to-date losses to 1.3 per cent and bringing year-to-date gains to 5.1 per cent.

On Monday, the Australian Dollar rose to 104.07 US cents from the last Friday’s 103.95 cents. This was after the markets digested better than what was expected from the Chinese manufacturing data as well as from weak domestic building approval figures.

According to Andrew Salter, ANZ foreign exchange strategist, the strengthening of the Australian dollar is due to Asian market’s positive reaction to Chinese manufacturing data. As data reveal, China’s manufacturing has continuously expanded in March as opposed to what economist expected it to be.

"The Aussie dollar rose sharply early in the Asian session. But we've unwound some of those gains later this session,” Mr. Salter said.

After negative offshore leads and some lower prices of commodity, the Australian share market closed flat.

Figures reveal that Benchmark S&P/ASX200 index went down by 3.3 points, or an equivalent of 0.08 percent. It is now at 4,270.4 points. On the other hand, the broader All Ordinaries index eased about 4.2 points, equivalent to 0.1 percent, or 4,360.7 points.

It has also be revealed that the futures contract for June share price index went down by 10 points. It is now at 4,285 points with contracts traded reaching a total of 26,655.

From 106.16 cents as Thursday closed, the Australian dollar was already trading at 106.28 cents last Friday which evidently showed a rise for the currency.

However, in the official figures that were released today, Australian exports revealed a drop of 8 percent in February resulting to Australia being pushed for a deficit. This is the first time to happen ever in a year. This first trade deficit may weaken the growth of the economy according to economists.

After some good news and positive economic data from Germany and US were released, the Australian dollar had risen back to above 107 cents. From yesterday’s trading of 106.47 cents, it is now at 107.17 US cents.

The local currency has been seen to be trading in a tight range after lifting overnight, according Tim Waterer, CMC Markets foreign exchange dealer.

"We didn't see any spectacular moves one way or the other. It was just building on those gains, courtesy of more positive data abroad. I think it's in a holding pattern, ahead of some more US and European data out tonight,” he said.

The Australian market rose higher today following an agreement for Greece’s second bailout. The data include benchmark S&P/ASX200 going up by 35.1 points or .82 percent at 4,291.2 points. On the other hand, All Ordinaries Index, rose by 35.4 points, equivalent to 0.82 percent, at 4,368.2 points.

These data went up when the news reached the local market at 1400 AEDT that Eurozone finance ministers had sealed a 130 billion euro deal bailout for Greece. With this deal, Athens’ government debt to gross domestic product ratio will be reduced back to 120.5 percent by the year 2020.

Australia’s benchmark S&P/ASX200/ index went down by 16.6 points, or 39 percent, that is equal to 4,521.2. On the other hand, the All Ordinaries Index also went down by 13.1 points, or 0.3 percent, that is equal to 4.320.1 at the close.

With 19,799 contracts traded, the March share price index future contracts also went down by 22 points. Generally, there have been 1.89 billion shares that were traded for $4.22 billion.

A two percent rise was seen in the Australian shares as it closed this week. This was after the yields on government debt issues by Italy and Spain had fallen to their lowest. A total of 10 billion euros in bond were sold by Spain while Italy sold 12 billion euros of bills.

"Spain’s auction was met with strong demand at resulting yields lower than the same maturities late last year, while the Italian auction also saw yields on one-year maturities falling to their lowest levels since June 2011. Obviously investors welcomed these developments,” said Cameron Peacock at IG Markets.

As poor data out of Asia and the bad news of the growing outlook of a recession in Europe are sending investors running for cover, the Australian stocks dropped to a two-week low.

Stocks have been closing lower for the fifth day out of six after more dismal news comes from Europe overnight which saw an increase of Italian bond to a euro-era record, which then has triggered a sharp selloff in commodities as investors were rushing to the perceived safe haven of the dollar.

Data revealed that China's manufacturing sector has continued to contract in December as exports slowed compounded fears that the euro zone debt crisis is already slowing growth in Asia.

With the Mid Year Economic and Fiscal Outlook statement revealing a drop in the revenue for the next four financial years amounting to a whopping $20 billion, Wayne Swan, Federal Treasurer, has been prompted to put a halt to spending in order to save the 2012-2013 budget surplus promised to the Labor.

"We are experiencing the worst bout of global instability since the global financial crisis,” said Mr. Swan.

Though the economy of Australia is seen by the Treasury to grow by 3.25 percent in the financial year 2011-12, Mr. Swan is still trying to illustrate the global economy and its impacts on Australian economy using the MYEFO report.

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